Effects of the 2008 Financial Crisis on the Determinants of Foreign Direct Investments in the West African Economic and Monetary Union (WAEMU): A Panel Data Approach

Abstract

This article analyzes through a panel data analysis covering the period 1994 to 2016, the effects of the 2008 financial crisis on the determinants of Foreign Direct Investment in the West African Economic and Monetary Union (WAEMU). From the analysis, it turns out that this crisis has strongly impacted FDI’s determinants in the union. In fact, as consequence, it created a much more infatuation of resource-seeking investors in spite of market-seeking investors. This result shows that those countries can still attract investors even in time of crisis if they have tremendous natural resources, which makes the protection of these resources very important. In addition, we can notice that after the crisis, the stability in the region became an important decisional variable for foreign investors. That points out the importance of promoting a good political governance. Furthermore, the study has also shown that the financial crisis has been a stepping corner for the emergence of a third type of investors in the region (efficiency seeking investors).